Long-Term Care Planning

01/05/2016

Purchasing a long-term care insurance policy can be extremely confusing, time-consuming and a complete waste of aspirin.

Anyone who has ever looked into it knows that the costs of staying in a nursing home are extreme. With people generally living longer more and more people are having to confront how they will pay those costs.

Because of this concern an industry arose to seemingly help pay for the costs. Insurers began to offer policies that would cover the costs. As simple as it might sound to pay for nursing home costs with a long-term care policy it is anything but a simple process.

The key thing to understand is that 90% of the companies that offered long-term care policies in the past no longer do so. These companies discovered it is very difficult for insurers to make money on the policies.

Those companies still in the market offer a confusing array of policies with benefits and costs that are not always easily understood. It can be migraine-inducing for people to figure out what they are getting if they purchase a policy.

It can also be a complete waste of time for a couple of reasons.

First, 40% of people who apply for the policies are turned down for health reasons. Second, the policies do not offer life coverage. They are short term policies and if your need for coverage exceeds the policy term then the money spent on premiums is wasted.

As the New York Times suggests, if you are considering long-term care insurance, it is important that you seek independent advice, such as from an elder law or estate planning attorney. That way you can be sure the policy is actually needed and can be certain of the benefits you will receive under the policy. I can help you review the options and decide on the best for your particular needs and wants. Please set up a consultation before you make up your mind!

11/02/2015

Three diseases, leading killers of Americans, often involve long periods of decline before death. Two of them — heart disease and cancer — usually require expensive drugs, surgeries and hospitalizations. The third, dementia, has no effective treatments to slow its course. So when a group of researchers asked which of these diseases involved the greatest health care costs in the last five years of life, the answer they found might seem surprising. The most expensive, by far, was dementia. The study looked at patients on Medicare. The average total cost of care for a person with dementia over those five years was $287,038. For a patient who died of heart disease it was $175,136. For a cancer patient it was $173,383. Medicare paid almost the same amount for patients with each of those diseases — close to $100,000 — but dementia patients had many more expenses that were not covered. On average, the out-of-pocket cost for a patient with dementia was $61,522 — more than 80 percent higher than the cost for someone with heart disease or cancer. The reason is that dementia patients need caregivers to watch them, help with basic activities like eating, dressing and bathing, and provide constant supervision to make sure they do not wander off or harm themselves. None of those costs was covered by Medicare.

Most families just aren't prepared for the financial burden of dementia. They assume that Medicare covers all of the expenses. Not so. Patients and their families don't realize that isn't the case. Plus, everything gets more complicated when an individual has dementia.

For example, if a dementia patient in a nursing home gets a fever, the staff may say that they aren't equipped to handle it. They call 911. The patient is then admitted to the hospital. This can lead to complications for the patient suffering from dementia. They may get delirious and confused, slip or fall out of bed and sustain injuries, or they choke on their food. This can cause medical costs to sky-rocket.

There are large disparities in out-of-pocket costs for the three diseases. Medicare covers discrete medical services like office visits and acute care, including hospitalization and surgery. These are the types of expenses experienced by cancer patients and heart patients. Those patients usually don't need full-time home or nursing home care until the very end of their life, if at all. As a result, they don't see that continuing cost. On the other hand, dementia patients need constant care for years. In addition, these dementia patients may not be sick enough for a nursing home, but they still will need supervision and care.

When dementia patients are sick enough for a nursing home, the cost is not covered by health insurance. More than half of patients with dementia— with three-quarters of those from racial minorities—spend down, using savings to pay for the nursing home until the money is all gone. After that, Medicaid takes over.

10/27/2015

Richard A. Courtney, President of the Special Needs Alliance (SNA) and principal in the Courtney Elder Law Associates section of Frascogna Courtney, PLLC, testified Friday, September 18 before the U.S. House Energy and Commerce Committee Subcommittee on Health in favor of the Special Needs Trust Fairness Act (H.R. 670). The bill would enable mentally capable adults with disabilities to establish "Special Needs Trusts" (SNT) on their own behalf. SNTs are a means of protecting eligibility for assets-based programs such as Medicaid and SSI (Supplemental Security Income), while holding funds for expenses that those programs fail to cover. The same measure was approved unanimously by the U.S. Senate on September 9th.

Richard Courtney told the Subcommittee members that the legislation that originally created Special Needs Trusts (SNTs), the Omnibus Budget Reconciliation Act of 1993, "included a drafting oversight that seems to assume that a person with disabilities lacks the requisite mental capacity to enter into a contract… We believe it was … not the intent of Congress to deny a basic right to individuals with disabilities."

In its report on the testimony, The (Jackson, MS) Clarion-Ledger's "Courtney testifies before Congress on behalf of persons with disabilities," said that, at present, special needs trusts funded with assets of an individual with disabilities must be created for that individual by his or her parent, grandparent, legal guardian or a court. Because of this requirement, adults with no living parents or grandparents and no guardian are forced to petition the court to create a special needs trust.

Courtney based his remarks on both his professional experience as a special needs and elder law attorney, as well as his experience as the father of a daughter with cerebral palsy and learning disabilities. Speaking of daughter Melanie, he noted that she needs and is receiving attendant care under a Medicaid waiver program. Because the cost of her care and services is expensive, she must rely on programs such as Medicaid, as do many persons with disabilities.

Right now the law says that she can't create her own trust if she were to receive an inheritance or settlement—so she could forfeit her Medicaid waiver benefits that pay her attendant to her each day for a few hours.

An SNT would allow Melanie to pay for additional health care that's not covered by Medicaid, in addition to basics like clothing, transportation, and furniture.

09/25/2015

How long will you live? It’s a key question in retirement planning. If you’re healthy and your family tree has branches with staying power, you may figure that you have decades ahead. If your parents died early of natural causes, you may assume a shorter life. Yet research shows that behavior is more crucial than genes in determining longevity. If you are eating better, smoking less, and exercising more than your parents did, there’s a good chance you’ll live longer than they did. You’ll also need to consider how much money to live on. With low expenses, you may be able to get by with as little as 55 percent of your preretirement income. But based on a survey of recently retired readers, Consumer Reports estimates that 85 percent of income from your last year of work is about right.

Delay claiming Social Security. This is the least costly way to add to your income later in life. For example, those born in 1949 are now reaching “full retirement age.” They are able to earn a benefit that’s 8% higher each year they delay, up to age 70. At the minimum, you should wait to claim until your full retirement age, which ranges from 66 (for people born from 1943 to 1954) to 67 (for people born in 1960 and later).

Buy an Annuity. Consumer Reports’ surveys of retired readers show that having a pension as a guaranteed income correlates with satisfaction in retirement. With these becoming less available, insurers are providing annuities, which have pension-like, lifetime income. If you have a small nest egg, the less you’ll want to devote to an annuity, as this effectively locks up your savings. A 65-year-old could cover all spending after age 85 by earmarking 10-15% of his or her current assets toward purchasing a longevity annuity.

What about Long-Term Care Insurance? The average cost of nursing home care in a semiprivate room is about $80,300 per year. Although 44% of men and 58% of women currently age 65 will need nursing home care at some point, those stays will average less than a year for men and less than 18 months for women. Most of the care is provided at home or another community setting. Remember that Medicare does not typically pay for these long-term costs. Assisted living facilities, where stays are around 22 months and the cost is about $43,200 annually, might not even accept Medicaid.

08/07/2015

Buffalo attorney Julie Bargnesi is a proponent of fairness to health care providers and patients alike. She’s not only an attorney who represents health care providers and is a part of the health care industry practice team at Harris Beach, she was once a nurse in a hospital where part of her job was advocating for patients. It’s just one reason she stresses the importance of having the ability to arbitrate cases from the nursing home setting; “This is fair to both sides, and as a nurse I was always seeing both sides of it,” she said. “There’s a lot of nursing home litigation in Western New York and it is time-consuming and expensive for everyone.”

But not New York, because of a law that didn’t allow for arbitration agreements to settle incidents that occurred in nursing homes. Several states, including New York, refused to enforce arbitration clauses in nursing home admission contracts. Instead, they litigated.

However, in 2012, the issue reached the U.S. Supreme Court in Marmet Health Care Center v. Brown. That decision struck down any state law that didn’t permit an arbitration provision in the nursing home matter. The ruling held that the Federal Arbitration Act (FAA) overrules any state law that says arbitration clauses in nursing home contracts aren’t enforceable for lawsuits stemming from injury or death.

Despite the Supreme Court’s decision in 2012, the topic still isn’t well-known, the article explained. But nursing homes have started adding the clause into patient contracts, and the majority of families and residents are signing them. With the rise in litigation, the article says that it’s at least a tool that nursing home owners can use to give them some protection from costly verdicts.

Patients will still have protection, as cases can still be challenged in courts, and arbitration agreements can be struck if they aren’t properly constructed.

The arbitrator is like a judge who sees both sides and may say, “He’s kinda right and she’s kinda right, so I’m going to make everyone happy and split the baby.” Arbitration tends to be fairer.

Just like any contract, the article says that a court can review the arbitration agreement to make sure it is legal. A contract can’t take advantage of the resident or his or her family, and a nursing home can’t deny admission based on whether the arbitration agreement in the contract is signed.

The article urges patients and family members to be aware of this arbitration agreement, which will arbitrate all potential claims and waive litigation.

02/02/2015

One adult son talks about his mother-in-law's well-being: She is elderly, lives alone, experiences symptoms of dementia, and doesn't accept help easily. She refuses to have strangers in the house. She has lost all effort to cook, but she will not have someone come in to help her with cooking. We tried a couple of house cleaners, but they don't clean the way she does. She refuses to even look at any of these assisted living places. If she knows my wife is taking her there, she refuses to get in the car. She's stubborn. What do you do, call the cops?

The recent Hometown Life article, titled "Plan ahead to assure secure future for aging parents," stressed the importance of planning ahead for elderly parents who are or may become physically or mentally unable to care for themselves. This process should include two important documents: a power of attorney—which can give an adult child legal authority to act on behalf of elderly parents with financial matters—and a designation of health care surrogate—to help them in medical matters. By starting early, children and their parents can work together to create these documents.

The article also answers questions on a few other topics:

What about putting your name on your parents' bank accounts?

Children should not be joint owners, because you’ll be subjecting your parents' assets to all of your liabilities, causing issues for future benefits. The government is more likely to scrutinize a joint account if the parent applies for Medicaid when transitioning to a skilled nursing facility. Instead, a signed financial power of attorney allows an adult child to pay bills, sign checks, and help the parent with other financial matters—without the need for joint bank accounts.

Who pays when an elderly parent, on Medicare, needs rehab in a skilled nursing center?

Medicare may pay 100 percent of the first 20 days. After that, Medicare may pay 80 percent, and supplemental insurance may pay the other 20 percent of the bill. There is a 100-day Medicare benefit, but not everyone qualifies. You also need to have a 30-day wellness period outside the hospital or a skilled nursing center for that benefit to reset. For example, if the parent leaves the facility on Day 20—but returns the next week—they start where they left off at Day 21 because they didn't have a 30-day wellness period.

Should I give any money away if considering entering a skilled nursing home (with Medicaid)?

No, Medicaid will examine the past five years of your finances when you apply for coverage. If you have given money away, you could be severely penalized with long periods of ineligibility and you may not get Medicaid even if you have zero dollars.

01/06/2015

Wills can tell a lot about what people value. Looking through old wills can show how values might have changed over the years. The UK has recently aided that effort by making its archived wills available electronically dating back to 1858.

We often hear about the estates of recently deceased celebrities. Anyone can read the newspaper or search Google to find out the details of Michael Jackson's estate. However, the estates of historic famous people are more difficult to find. It often requires going to the library and pouring over history books.

The database includes many famous names, such as Winston Churchill and Charles Dickens. This is an interesting project and well worth a look for anyone who is interested in the lives and deaths of historic figures.

Closer to home, in the United States, something like this would need to be done on the state level.

One important message for modern estate planning is that wills are public.

When filed with a probate court, wills become available for the public to access. While it is not as easy to access wills in the United States as it is in the United Kingdom, it can still be done.

01/05/2015

Sarah Long was found dead in her home last July. While police are still investigating the circumstances of her death, the battle over her estate is heating up.

Sarah Long was reported missing last July and found dead in her home of gunshot wounds. Initially, her death was ruled to be a suicide. However, inconsistent evidence at the scene later caused police to open up a homicide investigation. The police still do not know what happened to Ms. Long.

Long had previously made a will that left everything to her boyfriend. She also had an estranged husband and, under South Carolina law, the husband should be entitled to 15% of her estate regardless of what her will states. (In Florida, the amount would be 30%.)

The husband and the boyfriend have been fighting over the estate in probate court. To make interesting matters more interesting, Long's family has also intervened.

There are allegations that Long made the will giving everything to her boyfriend under duress and that her husband abused her.

The latest development? The boyfriend and the husband have reached an agreement to which Long's family objects. If it turns out that Long was murdered, then the identity of the killer may also play a role in who gets the estate.

Hoskins' will is somewhat refreshing. Recent celebrity estate cases have often been fairly messy with serious estate planning mistakes. Hoskins, however, did what many ordinary people choose to do, he left everything to his spouse.

If a mistake was made here, it is that we know what Hoskins chose to do with his estate. By using a will, the details of his estate were made public. If he had used a trust, it is more likely that his estate and his wife's privacy would have remained free from public scrutiny.

That is something that everyone should keep in mind. Wills are made public. If you do not want everyone knowing the details of your estate, then you need something besides a will.